SEC to examine alternative mutual funds : WSJ

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011.

Credit: Reuters/Jonathan Ernst

(Reuters) - The Securities and Exchange Commission has launched a broad examination of alternative mutual funds, the Wall Street Journal reported, citing people familiar with the matter.

The so-called funds "sweep" includes examinations of large investment firms such as BlackRock Inc (BLK.N) and AQR Capital Management LLC, as also smaller firms that previously didn't offer mutual funds, the Journal said. (on.wsj.com/1ppVgBx)

Alternative mutual funds typically employ investment strategies that imitate those of hedge funds, such as investing in private debt or shorting assets, and command higher fees. Traditional mutual funds, in comparison, generally invest in more standard asset classes such as stocks and bonds for the long haul.

Reuters reported in July that a surge of investment in alternative mutual funds had caught the attention of the regulators and that the SEC would launch examinations into these.

The SEC also expects alternative funds to follow a regulation that generally requires mutual funds to send payments to investors within seven days after they redeem shares.

BlackRock declined to comment. AQR Capital Management was not immediately available for comment.